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Experienced member

The markets are trading in a very tight range today after last Fridays gap down to the master level of $102 on the SPY. This signaled a completion of the second down move of the markets and a bounce was coming. The first move down took us to $104.00 on the SPY, another master level. Off of that level, the markets bounced 3 points to $107. Off the current master level hit from last Friday, the markets have bounced a total of 4 points to a high just over $106. These technical calculations take time but are extremely accurate and continue to great the money tree we talk about so often. The move today in the markets is much like a pause day ahead of the biggest economic data of the week. This data will be the initial and continuing claims reported tomorrow at 8:30am ET. After the technical bounce off the $102 level, the markets today have gone into the pause as they look to that number for the next move. Stay tuned as this will be the tipping point for the week. Jobs data reported tomorrow at 8:30am ET!

Experienced member

As The Dollar Hits The Lows Of The Day, The Markets Near Double Top Resistance

The markets continues to be strong on the back of Alcoa (AA) earnings, Jobless Claims numbers (reported at 8:30am ET) and of course, the weak dollar. The combination of these three factors are giving the market a solid upside move. The biggest catalyst by far continues to be the dollar as it is hitting new lows and each tick in the dollar can be seen with an inverse tick in the markets. Truly amazing. The weak dollar policy of the government and Federal Reserve continues to help keep the markets afloat. This is what is called a reinflation rally as they crush the dollar to get commodities higher. In doing so, the major stocks that flood the indexes get a boost thus pumping the markets higher. It is a beautiful thing in the near term. However, the scary thing is that the value of the dollar has dropped 29% in the last few years alone. That means that each persons buying power has dropped by that amount as well. Forgot the 50% drop in the markest from 2007 until March 2009 lows, add a 29% reduction in buying power on to that! Crazy stuff. Anyways, some key stocks to watch are Goldman Sachs which is very weak and could be a leading indicator. In addition, AAPL continues to be weak as it was yesterday. That stock is also known as a leading indicator. Follow the dollar the rest of the day, it will tell you where this market is going.

Experienced member

The semi-conductors are strong today after a nice 60 minute consolidation pullback. Often pullback patterns of this nature lead to a move back in the direction before the consolidation. Notice how the $SOX pulled back for 3-4 days and then popped higher today. There will be resistance at the 323.00 and 325.00 levels.

Experienced member

The TBT is a double short the 20+ bond. Therefore, if yields go higher the TBT will go higher as well and vice versa. Look at the higher low 60 minute ppattern on the TBT chart. It actually formed a W pattern which often leads to big moves. Once the middle of the W(circled area) is cleared the continuation higher advances with strength. It is possible to get a higher V on a pullback at the 200 moving average here. Moral of the story is to look for W patterns to catch the big move.

Experienced member

LRCX has continued to move higher from is October 2nd low. Very often when a stock moves to far from it's 20 moving average it needs to come back into it at some point. Look at LRCX, notice how it extended it is from the 60 minute 20 moving average. This is the most extended it has been from this key moving average and may need to pull back toward it. It is important to notice that pullbacks usually occur around the whole round numbers and in this case the 38.00 area.

Experienced member

Gold since the beginning of recorded time has been viewed as the one true currency. Ancient civilizations such as the Egyptians, Persians, Babylonians, Greeks, and Romans all had gold as the one true currency in their monetary systems. While fiat money systems have come and gone gold has stood the test of time. Even Christopher Columbus was seeking to trade for gold when he founded the new world. Why was gold so heavily sought after? What is so special about this metal that men are willing to die for it and economies collapse when they leave it as the standard.

In 2000 when the technology bubble burst and the birth of a new bear market began gold was trading under $300 an ounce. The Federal Reserve Bank, then lead by Alan Greenspan, began to lower interest rates and gold began to rise. Even as the stock market seemed to recover in 2003 gold continued to move higher trading around $400 an ounce. As the housing market boom began gold just kept moving higher and has never stopped. It seems gold was signaling to world that another bubble and bust was in the making. In 2007, when the next great phase or perhaps the second bear campaign was beginning gold traded at just over 1000 an ounce. This metal or so called currency was up over 300 percent since Federal Reserve Chairman Alan Greenspan began lowering the Fed funds rate to 1 percent and giving birth to the housing boom. Could another bubble be in the making? Could this be a repeat of the recent past (2000-2007) as the current Federal Reserve Bank Chairman Ben Bernanke has lowered rates to zero and gold has soared to new all-time highs trading at $1049 an ounce as of the close on October 9th 2009? This time, however, the housing market has not reacted as it did in 2002-2003 and the unemployment picture is much different this time around as well.

Where does the U.S. Dollar fit into this picture? The dollar has steadily declined since the 2000 stock market bust. It is now very close to it's 2008 low again when oil traded as high as $147 a barrel. Currently oil is traded around $72 a barrel and has been very volatile since it's recent peak of $89 a barrel. Is it possible that the market is still fighting a deflationary picture? Everywhere we turn we hear about the inflationary scenario being painted in the media. Perhaps the U.S. government and the Federal Reserve bank would actually prefer inflation and are actually trying to create it. If inflation takes over then the Federal Reserve Bank could simply raise interest rates to solve the problem. Can the world survive another dose of the same remedy that Alan Greenspan prescribed in 2001? What if this is not even the same illness?

What if this is a fight against deflation? Japan is still fighting deflation from the late 1980's. At the peak of the Japanese economy the Nikkei stock market index was trading near 40,000 and today it is at 10,000. It was even lower before the recent global coordinated stimulus plan and has never even retraced 50 percent of what it lost since the late 80's decline. Please understand that that was 20 years ago since their deflationary economic spiral began. The one thing that probably saved the Japanese people from a much worst personal economic environment was that they had a high savings rate and very low debt. This is something that the people in the United States do not have. They simply have the opposite. They have very little savings and are drowning in debt. On top of that they have a government that tells them to go out and spend too.

So while we hear about the great recovery that is taking place all over the world our friend gold is telling us a different story. Yes, gold could be due for a pullback in the near term as it is getting very crowded with speculators at it's new all-time trading high price. However, it is signaling the warning signs of something that is not healthy with this new stimulus, bailout, or whatever else you want to title it. Whether it is inflation or deflation that is on the horizon gold is telling us to watch out.